IABA Tax on Alcohol: Annulment of Excise Duty Assessment on Port Wine Exports to France

ARBITRAL DECISION

1. • REPORT

1.1. - Cooperative A…, CRL, taxpayer no. …, claimant in the above-referenced tax proceeding (hereinafter Claimant), invoked the provisions of article 2(2)(c) of Decree-Law no. 10/2011, of 20 January (hereinafter RJAT) and article 99 of the Code of Tax Procedure and Process, to request the constitution of an arbitral tribunal, in order to:

• Declare null and void the assessment of the Tax on Alcohol and Alcoholic Beverages (hereinafter designated IABA), in the amount of € 10,673.49, referred to in Assessment Record no. … of 28-05-2014, from the Customs Delegation of …, made following dispatch no. …, of 28-05-2014, issued by the Head of the said Customs Delegation.

• The refund of the sum of € 10,673.49, associated with Assessment Record no. … of 28-05-2014, from the Customs Delegation of ….

• Condemnation of the Tax and Customs Authority to payment of compensatory interest for payment of the improperly assessed and paid sum.

1.2. - Pursuant to article 6(1) and article 11(1)(a) of Decree-Law no. 10/2011, of 20 January, the Deontological Council of CAAD designated the undersigned, on 16-03-2015, as sole arbitrator António Correia Valent, who communicated acceptance of the assignment.

• On 16-03-2015 the Parties were notified of this designation, in accordance with the combined provisions of article 11(1)(b) of RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, and articles 6 and 7 of the Code of Deontology, having manifested no wish to refuse the arbitrator's designation.

• In these circumstances, in accordance with the provisions of article 11(1)(c) of Decree-Law no. 10/2011, of 20 January, as amended by article 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal was constituted on 31/3/2015.

• On 7 September 2015, the Arbitral Tribunal considered the meeting provided for in article 18 of RJAT to be dispensed with, taking into account both the orders issued on this matter in SGP and the circumstance that the dispute relates fundamentally to a matter of law, as well as the parties' wish to dispense with the said meeting.

1.3. - The Claimant, in substantiating its request for arbitral pronouncement, states, in summary, the following:

• That it is a company engaged in the production and distribution of alcoholic beverages, particularly Port wine.

• That, within the scope of its activity, it sold to its customer B…, cf. invoice no. … issued on 04-06-2010, the quantity of 20,880 bottles of Port wine (C…), for the value of € 40,716.00, which had as destination the company D…, in France.

• That the said merchandise was, in those circumstances, dispatched to France on 04-06-2010, for which purpose the Administrative Accompanying Document (hereinafter DAA) was issued in the legally prescribed copies.

• That it was the recipient of a documentary inspection action directed at various DAAs issued by it, and it was then found that DAA no. 2010/…/…, concerning the shipment of bottles in question in the case, had not been subject to verification.

• That the Head of the Customs Delegation of … understood that the formalities inherent to intra-community circulation of products subject to IEC were not complied with, particularly because copy no. 3 of the DAA had not been sent to that customs authority, having considered, in its dispatch of 29-10-2012, that the regime recorded in the said DAA was not subject to verification.

• That copy no. 3 of the DAA was, in fact, lost, which is why it was not possible to proceed with its sending to the Customs Delegation of ….

• That following the dispatch of the Head of the Customs Delegation of … regarding the non-verification of the regime, it proceeded to promptly send copy no. 4 of the DAA, stamped, dated 10-04-2010, by the Customs House of Valenciennes - France, as the competent customs authority at the destination.

• That, in order to provide the customs authorities with the necessary documentation for purposes of verification of DAA no. 2010/…/…, it undertook various measures, both with company D…, and with the Customs House of Valenciennes.

• That, following a request made on 18-06-2014, to company D… to confirm receipt of the mentioned shipment of Port wine (3,480 boxes of 6 bottles/20,880 bottles), it received 2 documents: one, embodied in the CMR, as a document concerning the transport of merchandise to the said company; another, designated "BON DE LIVRASION", which certifies delivery of the said shipment of Port wine bottles to D….

• That, following a request made on 18-06-2014, to the Regional Directorate of the Customs House of Valenciennes, requesting a copy of copy 3 of the DAA, or a declaration attesting the arrival of the said merchandise in France, it received, on 30-07-2014, from the said Customs House of Valenciennes, confirmation that the merchandise was received by company D…, as well as, additionally, a copy of the accounting extract attesting payment of the merchandise made by this company to company B…, which intermediated the transaction for the sale of the shipment of Port wine in question to company D…, as per the copy which it also received of invoice no. GD0…, issued on 09-07-2010 by company B… to the said company D….

• That it received, by bank transfer, the total amount of € 122,148.00, of which € 40,716.00 corresponds to the value of invoice no. …, of 04-06-2014, concerning payment of the merchandise in question in the case, sold to company B…, as per Payment Order received by Bank E….

• That, in the exercise of the right to prior hearing, concerning a Project of Corrections in VAT, associated with the alleged non-compliance with formalities relating to the shipment of Port wine bottles dispatched to France, it sent to the Finance Services Directorate of Vila Real all the documentation attached to this proceeding, documentation which had also been sent to the Customs House of Braga, upon presentation of the administrative appeal.

• That it filed, on 11-08-2014, administrative appeal of the assessment act supported in the dispatch of the Head of the Customs Delegation of …, having then presented all the documentation attached to this proceeding, requesting the annulment of this act, which was dismissed.

• That the Customs Authorities made a Movement Verification Request with the Customs House of Valenciennes, without obtaining any conclusive response.

• That the merchandise in question in the case was never, at any moment, introduced into consumption in national territory, but rather dispatched to France under a tax suspension regime and consumed there, so that, in light of article 7 of CIEC, the special consumption tax cannot be exigible.

• That the Tax Administration, in light of article 6 of the Complementary Tax Inspection Procedure Regime (RCPIT) and article 58 of the General Tax Law (LGT), must undertake all measures necessary to ascertain the material truth.

• That the assessment of the IEC concerning the merchandise in the case, which were, in fact, dispatched from Portugal to France, solely because copy 3 of the DAA was not sent to the customs authorities, corresponds to a violation of the principle of the prevalence of substance over form.

1.4. - The Defendant, Tax and Customs Authority (hereinafter designated AT), proceeded, on 18-05-2015, to join the Administrative Process and presented response, in which it states, in summary, the following:

• That the Claimant is an operator in the area of IEC, with NIEC PT …, holder of the status of authorized depositary, whose activity is subject to control by the Customs House of Braga - Customs Delegation of …, and that, in light of CIEC, it may, in particular, carry out dispatches of products subject to IEC in tax suspension to other Member States.

• That in the course of documentary inspection directed at the Claimant, instituted under no. …/…/2012, of 17-10-2012, by the Customs Delegation of …, the non-verification of an intra-community circulation operation, under a tax suspension regime for alcohol and alcoholic beverages (IABA), with destination to France, concerning 20,880 bottles of Port wine, was found.

• That the 20,880 bottles of Port wine were dispatched from Portugal to France, covered by DAA no. 2010/…/01, of 04-06-2010, and that, copy 3 of the said DAA not having been delivered in order to verify the circulation operation in question, a Movement Verification Request was made to the customs authorities of the said Member State of destination, with no conclusive response being obtained.

• That, in light of the non-verification of the circulation regime in reference, the "a posteriori" collection process no. …/2014 was initiated, concerning the assessment act in IABA, in the amount of € 10,673.49, with AT, on 30-05-2014, notifying the Claimant to, within 15 days, proceed with its payment.

• That the Claimant reacted to the assessment act by filing an administrative appeal, which, by dispatch of the Director of the Customs House of Braga, issued on 30-10-2014, was dismissed, with the Claimant, on that same date, being notified of such dismissal.

• That the circulation regime for products subject to IEC, in tax suspension, implies the processing of the DAA by the dispatcher, document that accompanies the circulation of such products and whose copy 3, in light of article 35(1) of CIEC, must be returned to the dispatcher for verification of the regime.

• That the circulation regime for products subject to IEC, in tax suspension, according to what is established in article 35(6)(b) of CIEC is verified "After receipt by the dispatcher of the return copy of the administrative accompanying document or a copy of the commercial accompanying document duly annotated".

• That copy 3 of the DAA, as a return document, must contain the references provided in article 35(5) of CIEC, and that, on the other hand, in light of article 35(8) of that same article, the dispatcher has the obligation to inform the customs authorities of cases of non-verification of the regime, within two months.

• That DAA no. 2010/…/… constituted the basis for the intra-community dispatch in question in the case, so that its circulation regime in tax suspension would have to be verified in the informatic application SIC-DAA, after receipt of copy 3, as provided in article 35(6)(b) of CIEC, which did not happen, with the law requiring assessment of the tax.

• That alternative proof to non-return of copy 3 of the DAA cannot occur through presentation of documentation that the Claimant may deem appropriate and after detection of the irregularity, and that, on the other hand, such proof shall only be possible if the dispatcher has complied with the legal obligation to inform the competent customs authority of the non-verification of the regime, in accordance with article 35(8) of CIEC.

1. • ISSUE TO BE DECIDED

Given what is stated in the preceding paragraphs, concerning the positions of the parties and the arguments presented, the issue to be decided is the following:

To determine the legality of the dispatch of 28/05/2014, from the Head of the Customs Delegation of …, issued in Proc. CP …/2014, concerning the assessment subject of Assessment Record no. B - …., of 28/05/2014, from the Customs Delegation of ..., in the amount of € 10,673.49, resulting from the non-verification of the intra-community circulation regime for products subject to IEC, in tax suspension, concerning the dispatch of 20,880 bottles of Port wine, from Portugal to France, covered by DAA no. 2010/…./01, of 04-06-2010.

1. • PROCEDURAL REQUIREMENTS

• The Tribunal is materially competent and is regularly constituted, pursuant to articles 2(1)(a), 5(2)(a), 6(1), 10(1)(a) and 10(2) of RJAT;

• The parties possess legal personality and capacity, are legitimate and are legally represented (Cf. articles 4 and 10(2) of RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March);

• The process does not suffer from vices that would invalidate it;

• No incidents remain to be resolved, nor do any preliminary questions exist on which the Tribunal should pronounce.

Taking into account the administrative tax process and the documentary evidence attached to the case, it is now necessary to present the factual matter relevant to understanding the decision, which is established as follows.

1. • FACTUAL FINDINGS

4.1. - FACTS PROVEN

In terms of facts relevant to the decision to be rendered, this tribunal considers established, in light of the elements existing in the case, the following facts:

• The Claimant is a company engaged in the production and distribution of alcoholic beverages, particularly Port wine, being an operator in the area of IEC, with NIEC PT …, holder of the status of authorized depositary, whose activity is subject to control by the Customs House of Braga - Customs Delegation of ..., which, in light of CIEC, may, in particular, carry out dispatches of products subject to IEC in tax suspension to other Member States.

• The Claimant, within the scope of its activity, sold to its customer B…, cf. invoice no. …, issued on 04-06-2010, the quantity of 20,880 bottles of Port wine (C…), which had as destination the French company D….

• The 20,880 bottles of Port wine were dispatched to France on 04-06-2010, for which purpose the Administrative Accompanying Document was issued in the legally prescribed copies.

• The Claimant was the recipient of a documentary inspection action, with no. …/…/2012, conducted by the Customs Delegation of …, directed at various DAAs issued by it, having then found the non-verification of an intra-community circulation operation, under a tax suspension regime for alcohol and alcoholic beverages (IABA), concerning DAA no. 2010/…/….

• The Head of the Customs Delegation of ... understood that the formalities inherent to intra-community circulation of products subject to IEC were not complied with, particularly because copy no. 3 of DAA no. 2010/…/01 had not been sent to that customs authority, considering that the regime supported in the said DAA was not verified, having, in that framework, proceeded with the assessment of IABA.

• Copy no. 3 of DAA no. 2010/…/ was lost.

• Following the dispatch of the Head of the Customs Delegation of ..., concerning the non-verification of the regime, the Claimant proceeded to send, to the Customs Delegation of …, copy no. 4 of the DAA, stamped, dated 10-04-2010, by the Customs House of Valenciennes - France, as the competent customs authority at the destination.

• The Claimant undertook various measures intended to obtain documents for purposes of verification of DAA no. 2010/…/…, both with company D…, and with the Customs House of Valenciennes.

• The Claimant made, on 18-06-2014, a request to company D… to confirm receipt of the mentioned shipment of Port wine (3,480 boxes of 6 bottles/20,880 bottles), having, in that context, received 2 documents: one, embodied in the CMR, as a document concerning the transport of merchandise to the said company; another, designated "BON DE LIVRASION", which certifies delivery of the said shipment of Port wine bottles to D….

• The Claimant made, on 18-06-2014, a request to the Regional Directorate of the Customs House of Valenciennes requesting a copy of copy 3 of the DAA, or a declaration attesting the arrival of the said merchandise in France, having received, on 30-07-2014, from the said Customs House of Valenciennes, confirmation that the merchandise was received by company D…, as well as, additionally, a copy of the accounting extract attesting payment of the merchandise made by this company to company B…, which intermediated the transaction for the sale of the shipment of Port wine in question to company D…, as per the copy which it also received of invoice no. GD…, issued on 09-07-2010 by company B… to the said company D….

• In the exercise of the right to prior hearing, concerning a Project of Corrections in VAT, associated with the alleged non-compliance with formalities relating to the shipment of Port wine bottles received and dispatched to France, the Claimant sent to the Finance Services Directorate of Vila Real all the documentation attached to this proceeding, documentation which was also sent to the Customs House of Braga, upon presentation of the administrative appeal.

• In light of the non-verification of the circulation regime in reference, the "a posteriori" collection process no. …/2014 was initiated, concerning the assessment act in IABA, in the amount of € 10,673.49, with the Claimant, on 30-05-2014, being notified to, within 15 days, proceed with its payment.

• The Claimant made payment of the debt assessed, in the value of € 10,673.49, subject of assessment record no. …, of 28-05-2014, which was recorded in receipt no. 5609, of 16-06-2014, from the Customs Delegation of ….

• The Claimant filed, on 11-08-2014, administrative appeal of the assessment act supported in the dispatch of the Head of the Customs Delegation of …, requesting its annulment, which, by dispatch of the Director of the Customs House of Braga, issued on 30-10-2014, was dismissed.

• The Customs Authorities made a Movement Verification Request to the Customs House of Valenciennes, without any conclusive response being obtained.

• The merchandise in question in the case was never, at any moment, introduced into consumption in national territory, but rather dispatched to France under a tax suspension regime and there received.

4.2. - FACTS NOT PROVEN

No facts are deemed unproven, given that all facts considered relevant to the assessment of the claim were proven.

4.3. - SUBSTANTIATION OF FACTUAL MATTER

The substantiation of factual matters was based on the documents attached to the case, concerning each of the facts.

1. • LEGAL GROUNDS

5.1. - The factual matter is established, as it appears in no. 4.1 above, it being now necessary to determine the law applicable to the underlying facts, in view of the issue to be decided identified in no. 2 above, that is, to determine the legality of the dispatch of 28/05/2014, from the Head of the Customs Delegation of …, issued in Proc. CP …/2014, concerning the assessment subject of Assessment Record no. B - …, of 28/05/2014, from the Customs Delegation of ..., in the amount of € 10,673.49, resulting from the non-verification of the intra-community circulation regime for products subject to IEC, in tax suspension, concerning the dispatch of 20,880 bottles of Port wine, from Portugal to France, covered by DAA no. 2010/…/…, of 04-06-2010.

Having considered all of this, and taking into account, on one hand, the positions of the opposing parties, mentioned and arising from points 1.3 and 1.4 above, and considering, on the other hand, that the issue to be decided, as mentioned above, is inseparable from the determination of whether or not the intra-community circulation regime for products subject to IEC, in tax suspension, concerning the dispatch of merchandise identified in the case, was verified, it is necessary, in this context, to assess and render a decision.

1. • VERIFICATION OF THE INTRA-COMMUNITY CIRCULATION REGIME FOR PRODUCTS SUBJECT TO IEC, IN TAX SUSPENSION

6.1 - The central issue that must be clarified in this proceeding, because inseparable from the assessment of IABA, is whether, in light of non-presentation of copy 3 of the DAA, it is possible or not to present other documentary evidence that reveal to us a certainty and security equivalent to those sought to be achieved through presentation of said copy 3, and, in those circumstances, whether or not to proceed with verification of the regime.

6.2 - The Claimant, within the scope of its activity, sold to its customer B…, cf. invoice no. …, issued on 04-06-2010, the quantity of 20,880 bottles of Port wine (C…), which had as destination the company D…, in France.

The said merchandise was, in those circumstances, dispatched to France on 04-06-2010, for which purpose the Administrative Accompanying Document (DAA) no. 2010/…/01 was issued.

The formalities inherent to intra-community circulation of the products in question were not fully complied with, particularly because copy no. 3 of the DAA had not been returned to the customs authority of dispatch (Customs Delegation of …), having thus the Head of that Customs Delegation, considered, in its dispatch of 29-10-2012, that the regime recorded in the above-mentioned DAA was not subject to verification, by which, in particular, in light of articles 10 and 35(1)(a), 35(6)(b) and 35(8), all of CIEC, determined the consequent assessment of IABA.

6.3 - Following the assessment of the said tax on alcohol and alcoholic beverages, the Claimant sent to the Customs Delegation of … a copy of copy no. 4 of the DAA, stamped, dated 10-06-2010, by the Customs House of Valenciennes - France, as the competent customs authority at the destination.

7 - OF THE DOCUMENTS PRESENTED FOR VERIFICATION OF THE INTRA-COMMUNITY CIRCULATION REGIME FOR PRODUCTS SUBJECT TO IEC, IN TAX SUSPENSION

7.1 - In the course of the documentary inspection, referred to above, directed at the Claimant, instituted under no. …/…/2012, of 17-10-2012, by the Customs Delegation of .., the non-verification of an intra-community circulation operation, under a tax suspension regime for alcohol and alcoholic beverages (IABA), with destination to France, concerning 20,880 bottles of Port wine, was found.

7.2 - Following the mentioned inspection, the Claimant undertook various measures, both with company D…, and with the Customs House of Valenciennes, intended at obtaining evidence intended to demonstrate the regular routing of the 20,880 bottles of Port wine in question in the case, intended for obtaining documents capable of proving that the merchandise was effectively and regularly received at the destination, having, in that context, received, from company D…, two documents: one, embodied in the CMR, as a document concerning the transport of merchandise to the said company, in which is written a stamp, initialed, dated 10-06-2010, referring to receipt of the merchandise in question; another, designated "BON DE LIVRASION", issued by company B…, certifying both the "good delivery", on 10-06-2010, of the shipment of Port wine (3,480 boxes of 6 bottles/20,880 bottles) to the said company D…, and its transport from Portugal to France, in the vehicle with registration …-…, which is recorded in "field 11" of DAA no. 2010/…/…, of 04-06-2010.

7.3 - Beyond the documents referred to in the preceding point, the Claimant, in response to the request it addressed, on 18-06-2014, to the Regional Directorate of the Customs House of Valenciennes, also received, on 30-07-2014, from the Customs House of Valenciennes, a document conveying two pieces of information: one, confirming that the shipment of 20,880 bottles, with net weight of 15,660.00 kg was received by company D… and that the said merchandise was integrated into the inventory accounting of that company, on 10-06-2010, under registration no. 4804, as per copy of the accounting extract, which it attached; another, expressly referring that the merchandise in question was received and paid by company D… to company B…, which intermediated the transaction for the sale of the Port wine in question, attaching the corresponding copy of invoice no. GD… issued, on 09-07-2010, by company B… to the said company D….

8 - OF THE LEGAL ASSESSMENT OF THE VERIFICATION OF THE INTRA-COMMUNITY CIRCULATION REGIME FOR PRODUCTS SUBJECT TO IEC, IN TAX SUSPENSION

8.1 - The first question that arises is whether, in case of loss of copy 3 of the DAA, the regime in question can or cannot be verified, supported by the presentation of other documents. The answer, it may be advanced at this point, cannot but be affirmative, conditioned, however, to the requirement that the documents presented for that purpose reveal that the merchandise actually had the declared destination, which, in the case, corresponds to its regular receipt by company D…, in the Member State of destination, which means that such documents will have to be capable of ensuring the verification of the regime with the certainty and security equivalent to those sought to be achieved through presentation of copy 3 of the DAA.

8.2 - The legal formalities intended to verify the regime in question are well understood, given the high fiscal sensitivity of the products in question. Among them, it should be noted that verification of the regime in question occurs after receipt by the dispatcher of the Administrative Accompanying Document or a copy of the Commercial Accompanying Document, duly annotated, in accordance with article 35(6)(b) of CIEC, annotations that are contained in the various subsections of article 35(5) of the mentioned article.

8.3 - It should also be mentioned, in the framework of the formalities in question, the obligation imposed on the dispatcher to inform the customs authority within two months, counting from the date of dispatch of the products, of cases of non-verification of the regime, as established in article 35(8) of the said Code. It should also be mentioned that, after the said two-month period has elapsed and the situation of non-verification is found, the competent customs authority shall proceed with the assessment of the tax, in the case of IABA, as follows from article 35(9) of the said article and Code, for payment of which, in accordance with article 36(1) of CIEC, the natural or legal person who has become guarantor for payment of the tax is responsible, in the case the Claimant.

8.4 - In summary, it follows from the norms mentioned in the two preceding points, that non-receipt of copy 3 of the DAA determines the non-verification of the regime, the law presuming that, in those circumstances, the merchandise exited the suspension regime in which it was, being considered as irregularly introduced into consumption, a presumption that, moreover, is expressly established in article 7 of CIEC, more precisely in the body of article 7(2) of the said article, combined with its subsection (a).

8.5 - The mentioned presumption cannot but be rebuttable, as, indeed, notes Rui Oliva, in "Special Consumption Taxes and Tax Regime of Alcoholic Beverages", Lisbon: Rei dos Livros, p. 78, when, on this point, refers to it being "a rebuttable presumption of the responsibility of the dispatcher, as it cannot but be, under penalty of privileging the offending consignee, imposing absurd penalization on the dispatcher who provably complied with its declarative obligations […] and regularly dispatched the merchandise, solely because it did not communicate within two months following dispatch the failure to send copy no. 3 of the DAA by the consignee". (our emphasis)

8.6 - In the case at hand, it occurred, precisely, that the Claimant complied with all obligations associated with the dispatch of the 20,880 bottles of Port Wine to company D… in France, having not, however, in accordance with article 35(8) of CIEC, informed the Customs Delegation of …, within two months following dispatch, of the failure to send copy no. 3 of the DAA by the consignee, that is, the non-verification of the regime.

8.7 - The IABA debt in question in the case, assessed by the said Customs Delegation, in light of the situation of non-verification, is the responsibility of the dispatcher, unless the latter proves that the merchandise was, in fact, regularly received at the destination, thus rebutting the said presumption, such proof being made either through the DAA, in accordance with what is established in article 35(1)(a) and article 35(6)(b) of CIEC, or through other suitable means of proof for demonstration of this fact, as is explained more explicitly below.

9 - OF THE ASSESSMENT OF EVIDENCE FOR VERIFICATION OF THE INTRA-COMMUNITY CIRCULATION REGIME FOR PRODUCTS SUBJECT TO IEC, IN TAX SUSPENSION

9.1 - As follows from what was mentioned above, non-communication, within the two-month period, to the said Customs Delegation of …, of the non-verification of the regime, cannot be understood as making impossible, in absolute terms, the verification of the regime, unless the formal dimension of the provision providing for the said two-month period is attributed a value superior to its substantive dimension.

9.2 - The ratio of the provisions relating to the above-mentioned formalities shall have no other sense than that the product subject to IEC, in the case IABA, when it is taxed in the country of destination, should not be taxed in the country of dispatch, which is a basilar element of the regime. Strictly speaking, what is sought is to ensure that the product, in the case 20,880 bottles of Port Wine, be taxed correctly in the Member State in which it was received. Now in the case at hand the merchandise, inasmuch as it was received in the Member State of destination - France, having been taxed there, as follows from the documentation presented, cannot, again, come to be taxed in the country of dispatch.

9.3 - With respect to what is referred to in the preceding point, see FERNANDES, Manuel Teixeira, Journal of Public Finance and Tax Law of IDEFF, Year VII, no. 2, p. 180 et seq., when, concerning the main objectives of the regime in question, indicates, immediately, that of "[…] products circulating intra-community without tax burden - "principle of taxation at destination" - thus facilitating the commercial activity of community economic operators operating in their respective sectors of activity". (our emphasis)

9.4 - It has already been mentioned that the verification of the intra-community circulation regime for products subject to IEC, in tax suspension, aside from normally being effectuated through copy 3 of the DAA, can equally be done through other suitable means of proof, it not being, therefore, at all acceptable, the thesis that such regime can only be subject to verification through presentation of the mentioned copy.

9.5 - In light of all that has already been stated, the provision in article 35(6)(b) of CIEC should be interpreted in light of what is established in articles 50 and 115(1) of the Code of Tax Procedure and Process, thus admitting other means of proof capable of demonstrating that the shipment of Port Wine bottles in question actually had the destination that had been declared to it, upon its dispatch. On this question, see the understanding set forth, in particular, in Judgment no. 01560/05.5BEPRT, of 12-03-2015, of the Central Administrative Court North, when it considers that "Contrary to what is advocated by the Appellant […], no binding proof is required, any suitable means of proof being admitted, in the proceeding and in the process, in accordance with the provisions of articles 50 and 115(1) of the Code of Tax Procedure and Process", adding that the "Contrary understanding, namely, limitation through administrative circulars of the means of proof admitted in the rebuttal of that presumption is unacceptable as it restricts the right to proof that constitutional principles of justice and effective judicial protection suppose to be fully assured to the interested parties - cf. article 20 of the Fundamental Law." (our emphasis)

9.6 - As has already been noted in points 7.2 and 7.3, the documentation presented is embodied in the following: CMR (DOC. 10) and "BON DE LIVRASION" (DOC.11) sent by company D…, with the first, as a document concerning transport of merchandise to the said company, having a stamp, initialed, dated 10-06-2010, referring to receipt of the merchandise in question, and the second of these documents certifies both the "good delivery", on 10-06-2010, of the shipment of Port wine (3,480 boxes of 6 bottles/20,880 bottles) to the said company D…, and its transport from Portugal to France, in the vehicle with registration …-…, which is recorded in "field 11" of DAA no. 2010/…/…, of 04-06-2010. In the documentation presented is also the accounting extract (copy) of the inventory accounting of the company receiving the merchandise (DOC. 13), sent by the Customs House of Valenciennes, showing that the merchandise in question was received by company D… and is inscribed in its accounting, a document that is accompanied by confirmation that the shipment of 20,880 bottles, with net weight of 15,660.00 kg was received by company D… (DOC. 12) and that such merchandise was registered in said accounting under no. … (DOC. 12) and also a copy of invoice no. GD… (DOC. 14), also sent by the said Customs House of Valenciennes, issued on 09-07-2010 by company B… to the said company D…, expressly referring that the merchandise in question was received and paid by company D… to company B…, which intermediated the transaction for the sale of the Port wine in question (DOC.12).

9.7 - Given that the documentation presented is established, to which is added the Payment Order Received by Bank E…. (DOC.15), by means of which the Claimant received from company B…, by bank transfer, the amount of € 40,716.00 corresponding to the value of invoice no. …, of 04-06-2014, (DOC. 3) concerning the merchandise in question in the case, sold to the mentioned company, it is necessary to assess its probative value in order to verify the said regime.

9.8 - The documents referred to in the two preceding points do not fall into those which, in principle, entitle and belong to the commercial contracts underlying any circulation operation, such as the one in question in the case, in particular transport contracts, payment orders from abroad or invoices, insofar as the Customs House of Valenciennes, as the competent customs authority for control of the circulation operation in question and of the destination of the merchandise in question, certifies the actual receipt of the quantity of 20,880 bottles of Port wine (C…) by company D…, expressly referring its registration in the accounting of that company, and it should also be noted that such documents include all the references provided in the various subsections of article 35(5) of CIEC, as should be contained in the return copy.

9.9 - In these circumstances, the documents in question, whose assessment should not be made individually, but judged as a whole, do not open any space to admit the non-receipt of the merchandise by the consignee indicated in the DAA, that is, by D…, it being important to emphasize that such documents make it possible to achieve with certainty a degree of certainty clearly equivalent to that which would be achieved through presentation of the return copy (copy 3 of the DAA) visaed by the competent customs authority at the destination, whereby the presumption of irregular introduction into consumption of the 20,880 bottles of Port wine (C…) is, in this manner, rebutted. In this sense may be seen, in particular, the Judgment referenced in point 9.5.

10 - Knowing that the merchandise in question in the case arrived regularly at its destination, where it was subject to the corresponding tax charges, it would be wrong to again tax it, in the country of dispatch. Such a situation, aside from being absurd, not being able to correspond to the legally intended purposes, is manifest and in particular not tolerated by the principles of legality, proportionality and justice, while constitutional principles referred to in article 266 of the Constitution of the Portuguese Republic. In effect, the Tax Administration must pursue its attributions and exercise its competences in accordance with the principle of legality, which, as referred by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, p. 446, does not translate "[…] into mere formal subordination to the norms that specifically provide for the action of the administration, encompassing the duty of the administration to take into account the practical reflexes of the administrative activity it carries out", adding that "Therefore, the tax administration should refrain from implementing the legal commands, when, in light of the particularities of the case, the reasons for public interest that justify its action are not verified, or when a manifestly unjust result is produced […]", a result which, in the case at hand, translates into taxation of the merchandise in question in the country of dispatch, notwithstanding its taxation having already occurred at the destination. On the other hand, the legal purpose of the intra-community circulation regime, in tax suspension, was achieved, insofar as there is no doubt that the merchandise in question in the case was taxed at the destination, the Tax Administration not being able, in these circumstances, to aggravate taxation of the merchandise in question through its taxation in the country of dispatch, which is not tolerated by the principle of proportionality. Regarding the material truth of the essential elements to the assessment of the tax, among which will be knowledge of the true tax debtors, it is fitting to refer what is said to us by the above-mentioned authors, ibidem, in the annotation no. 5 to article 55 of the General Tax Law, when there they refer that, in the domain of the tax proceeding, the tax administration, particularly in light of the principles of impartiality and fairness, should be guided by "[…] criteria of detachment in the investigation of factual situations, undertaking all measures that appear necessary to investigate the material truth, regardless of whether the facts to be investigated are contrary to the patrimonial interests that the tax administration is entrusted to defend". (our emphasis)

11 - OF REFUND OF AMOUNT PAID AND COMPENSATORY INTEREST

• In accordance with the provision in article 24(1)(b) of RJAT, and in conformity with what is established therein, the arbitral decision on the merits of the claim that is not subject to appeal or challenge binds the tax administration from the end of the period provided for appeal or challenge, and it must - in the exact terms of the merits of the arbitral decision in favor of the tax debtor and until the end of the period provided for spontaneous execution of sentences of tax judicial courts - "Restore the situation that would exist if the tax act subject of the arbitral decision had not been done, adopting the acts and operations necessary for the purpose." (our emphasis)

• These are legal commands that are in total harmony with the provision in article 100 of the General Tax Law, applicable to the case by virtue of the provision in article 29(1)(a) of RJAT, in which it is established that "The tax administration is obliged, in case of partial or total merit of complaints or administrative remedies, or of judicial proceeding in favor of the tax debtor, to immediate and full reconstruction of the situation that would exist if the illegality had not been committed, comprising payment of compensatory interest, in the terms and conditions provided by law." (our emphasis)

• The case contained in the present case raises the manifest application of the mentioned norms, since following the illegality of the assessment acts (IABA and compensatory interest), referenced in this proceeding, there will, by force of these norms, necessarily be refund of the amounts paid, as title of tax and compensatory interest, which in the case at hand is concretized in the amount of € 10,673.49, as a way to achieve the reconstruction of the situation that would exist if the illegality had not been committed.

• As for compensatory interest, it appears manifest that, in light of what is established in article 61 of the Code of Tax Procedure and Process and the requirements of the right to compensatory interest being met, that is, verification of the existence of error attributable to the services resulting in payment of the tax debt in an amount superior to that legally due, as provided in article 43(1) of the General Tax Law, the Claimant is entitled to compensatory interest at the legal rate, calculated on the sum of € 10,673.49, which shall be counted from the date of payment of the tax and of the corresponding compensatory interest, until full refund of that same amount.

12 - CONCLUSIONS

Having considered all of the foregoing, and preparing the decision, it will be said, by way of conclusion, the following:

12.1 - In the case at hand, in light of the provisions of articles 50 and 115(1) of the Code of Tax Procedure and Process, any suitable means of proof is admissible to demonstrate the reality of the facts, and the provision in article 35(6)(b) of CIEC should be interpreted in light of those norms.

12.2 - The proofs referred to in the preceding point cannot confine themselves to the documents pertaining to the commercial contract underlying the said intra-community circulation regime, but rather postulate confirmation by the competent customs authority, in the case the French one, that the merchandise was regularly and effectively received at the destination.

12.3 - The documentation attached to the proceeding, intended to prove that the shipment of Port wine (3,480 boxes of 6 bottles/20,880 bottles) was received by company D…, does not consist solely of documents of a commercial nature, insofar as it is also comprised by the express confirmation, by the Customs House of Valenciennes, that the said shipment was, in fact, received by company D… (DOC. 12), as well as by the accounting extract (copy) of the inventory accounting of the company receiving the merchandise (DOC. 13), indicating that such merchandise was registered in said accounting under no. ….

12.4 - The documents in question, intended to prove that the shipment of Port wine (3,480 boxes of 6 bottles/20,880 bottles) was received by company D…, were also presented by the Claimant, both in the exercise of the right to prior hearing, and upon presentation of the administrative appeal, as is referenced in the case.

12.5 - The documents in question do not permit the existence of any doubt about the actual receipt of the merchandise by company D…, as its consignee, as such recorded in DAA no. 2010/…/01, of 04-06-2010.

12.6 - The proof embodied in the said documents provides a degree of certainty equivalent to that achieved with the formality of visa and certification on copy 3 of the DAAs, by the competent customs authority at the destination (Customs House of Valenciennes - France), proving that the merchandise was, in fact, regularly received at the destination, by company ….

12.7 - The tax, in the case IABA, is exigible in national territory at the moment of introduction into consumption of the products in question, introduction into consumption being considered as the exit of such products from the suspension regime - cf. article 7(2)(a) of CIEC.

12.8 - Payment of the amounts assessed in this proceeding is the responsibility of the dispatcher, unless, treating it as is the case, of intra-community circulation of products subject to IEC, in tax suspension, proof is made that the merchandise was regularly received in the Member State of destination, rebutting the presumption that the products were irregularly introduced into consumption, in light of non-return of copy no. 3 visaed by the customs authority at destination - cf. article 7(2)(a) and article 35(6)(b), both of CIEC.

12.9 - The presumption that the 20,880 bottles of Port Wine (C…) were irregularly introduced into consumption was rebutted by the Claimant, in light of the documents presented for that purpose.

12.10 - The amount of € 10,673.49, assessed as IABA and compensatory interest, concerning the merchandise referenced in this proceeding, subject of Assessment Record no. B - …, of 28/05/2014, from the Customs Delegation of …, was paid by the Claimant.

12.11 - In not admitting as proven that the merchandise was, effectively and regularly, received at the destination, AT, in light of what has just been stated, makes an erroneous interpretation and application of the legal norms mentioned, whether because it did not take into account an adequate interpretation and application of the legal norms relating to verification of the regime, which constitutes an error regarding the legal presuppositions, whether because the assessment of IABA in question in the case at hand rested on factual matters clearly divergent from the concrete reality, which constitutes an error regarding the factual presuppositions, thereby verifying the perpetration of tax acts lacking legality due to error regarding factual and legal presuppositions, which determines their annulment, for violation of law.

13 - DECISION

Therefore, having regard to all of the foregoing, this Arbitral Tribunal decides:

13.1- To judge the claim granted, by proven, on the ground of violation of law, the request for arbitral pronouncement in what concerns the annulment of the acts assessing IABA and compensatory interest referred to in the Claimant's claim, concerning the dispatch of 3,480 boxes of 6 bottles/20,880 bottles of Port Wine to company D… - France, under intra-community circulation regime for products subject to IEC, in tax suspension.

13.2 - To annul, consequently, the assessment acts of the Head of the Customs Delegation of …, concerning both the IABA and the compensatory interest associated with it, resulting from the non-consideration of the verification of the regime mentioned in the preceding point.

13.3 - To condemn AT to refund the sum of € 10,673.49, concerning the IABA and the compensatory interest assessed and paid, and to payment of compensatory interest at the legal rate, counted from its payment, until full refund of the said amount.

13.4 - To condemn AT to pay the costs of this proceeding.

VALUE OF THE PROCEEDING

In accordance with the provision in articles 306(2) of the Code of Civil Procedure (former 315(2)) and 97-A(1) of the Code of Tax Procedure and Process and article 3(2) of the Costs Regulation in Tax Arbitration Proceedings, the value of the proceeding is fixed at € 10,673.49.

COSTS

In accordance with the provision in article 12(2), at the end, and article 22(4), both of RJAT, and article 4 of the Costs Regulation in Tax Arbitration Proceedings and Table I, which is attached thereto, the total amount of costs is fixed at € 918.00.

Let it be notified.

Lisbon, 29 September 2015

The Arbitrator

António Correia Valent

(The text of this decision was prepared using a computer, in accordance with article 131(5) of the Code of Civil Procedure (former 138(5)), applicable by reference in article 29(1)(e) of Decree-Law no. 10/2011, of 20 January (RJAT), its wording being governed by the spelling prior to the 1990 Orthographic Agreement.)